Contra Costa County Northern Waterfront Market Assessment
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Contra Costa County Northern Waterfront Market Assessment TECHNICAL MEMORANDUM #1 CONTRA COSTA COUNTY NORTHERN WATERFRONT INITIATIVE MARKET ASSESSMENT TO: Rich Seithel, Chief, Annexations and Economic Stimulus Programs Patrick Roche, Principal Planner, Advanced Planning FROM: Gary Craft, Kevin Stichter, Michael Fischer, Monica Isbell, and Chiranjivi Bhamidipati SUBJECT: Economic Overview and Current Profile of Industrial and Maritime-Related Development within the San Francisco Bay Area and Contra Costa County (Task 1) DATE: August 19, 2013 This Memorandum presents the results of Task 1 of the Market Assessment for the Northern Waterfront. Information from Task 2 addressing transportation infrastructure is also included. The purpose of this memo was to provide an overview of the industrial and maritime-related development market conditions and identify and review key trends that could potentially impact the relative economic competitiveness of Contra Costa County’s Northern Waterfront. In summary, goods movement dependent industries and infrastructure play a vital role in the local economy and the economic health of the Northern Waterfront. ACKGROUND I. B Figure 1: Northern Waterfront Study Area The Northern Waterfront Study Area (see map at right) is approximately one mile wide and 55 miles long and contains 63.86 square miles. The Study Area includes six cities, several unincorporated communities, and a variety of unincorporated pockets of land (developed and undeveloped) that are located in the county. Within the Northern Waterfront there is a wide range of land uses from industrial, commercial, residential, marinas, public, and recreational uses, to natural habitat, open space, and wildlife refuges. Northern Waterfront Initiative In early 2013, the County Board of Supervisors launched an initiative to engage stakeholders along the waterfront from both the private and public sectors who are concerned with its economic future; wherein, the stakeholders could share information and exchange ideas about the emerging trends and issues affecting the waterfront with a specific focus on how maritime and landside transportation influences the waterfront’s current and future economic prospects. The primary objective of the Northern Waterfront Initiative is to promote economic development along the county’s working waterfront. -1- Contra Costa County Northern Waterfront Market Assessment Northern Waterfront’s Historical Role Historically, the Northern Waterfront has attracted major industrial users due to its proximity to water that provided easy access for marine transportation. Industrial development came early to Contra Costa County, appearing along the waterfront beginning around the 1860s. 1 Coal was discovered in 1859 in the hills south of Antioch. Several years later copper ore was discovered near Antioch and smelting works were built. Deep water access allowed for the shipping of various commodities including grain and other agriculture products. Port Costa became a major grain port for merchant sailing ships with warehouses and waterfront wharves. Antioch and Pittsburg also were important shipping points for grain (wheat and barley) during the 1860s and 1870s. By the early 1900s some forty factories had opened along the Sacramento River, including C&H Sugar, Standard Oil of California, Union Oil, Redwood Manufacturers Company, and Hercules Powder Works. The first manufactures to come to Contra Costa County were powder and dynamite works serving the mining industry. Chemical plants entered the picture at the turn of the century, as demand for sulfuric acid, chlorine and ammonia fertilizers increased with advances in chemistry and industrial agriculture. Oil refineries were built along the waterfront beginning with Union Oil in 1896; Standard Oil followed in 1901, and four others came in soon thereafter, making Contra Costa one of the leading refining centers in the United States. Crude oil for refining came by pipeline, ship, and rail tank cars from the San Joaquin Valley and Ventura fields. Other major industries included food processing and steel. By 1920, the Northern Waterfront accounted for over half the tonnage on San Francisco Bay. By 1940, Contra Costa was the largest manufacturing center in California in terms of the value of its industrial output. During World War II the Concord Naval Weapons Station was a major munitions ship loading facility. Following the war, other industrial plants were built. For example, DuPont built and operated a petro-chemical manufacturing plant near Oakley for more than forty years from 1956 to 1997. Ports and maritime shipping have played an important role in the trade and commerce of the region. Seaports constitute the hub around which the maritime sector operates, serving as gateways between their hinterlands and overseas markets to which they are linked by commerce. Consequently, waterfront locations have attracted manufacturing and processing industries that want to take advantage of low-cost inbound transportation of raw materials for production and outbound shipments of finished products to both export and domestic markets. Transport of bulk cargo required that manufacturing be done near the port in order to reduce transportation costs. This resulted in the building of large-scale industrial facilities and warehouses with port facilities handling the intermodal transfer of cargo between ships, barges, trucks, and railroads. The Northern Waterfront has followed this historical development pattern. Although manufacturing employment has declined, the 50-mile stretch of shoreline from Hercules to Oakley remains an important economic asset to the region. Given its waterfront setting, with deep- water channels and marine terminals, proximity to two Class 1 railroad lines, electric generating capacity, industrial zoned land, and other assets, Contra Costa’s Northern Waterfront offers a number of key advantages for industrial development. General neglect and declining investment over the past several decades has reduced the Northern Waterfront’s ability to remain competitive as a working waterfront. The physical development of the area which began over 100 years ago was based on a different platform for manufacturing and distributing goods, one which was well-suited to the infrastructure and building types of the time. Today, the main challenge is to figure out ways to adapt and revitalize this older infrastructure and develop the Northern Waterfront into a 21st century model for environmentally-and economically sustainable industrial development. 1 Walker, Richard A. “Industry Builds Out the City: The Suburbanization of Manufacturing in the San Francisco Bay Area, 1850- 1940”, 2004 - 2 - Contra Costa County Northern Waterfront Market Assessment II. OVERVIEW OF INDUSTRIAL AND MARITIME-RELATED DEVELOPMENT MARKET CONDITIONS IN THE SAN FRANCISCO BAY AREA AND CONTRA COSTA COUNTY Bay Area Industrial Sector2,3 The San Francisco Bay Area has a large diversified economy with a Gross Regional Product (GRP) of $535 billion, making it the 19th largest economy in the world. As a major population center, the Bay Area regional economy is highly dependent on the production, movement, and consumption of goods and services. Goods producing components of the economy include agriculture, forestry, fishing, and hunting; mining; construction; and manufacturing. Combined, the goods producing industries make up 14.3% of the region’s jobs, with manufacturing being the biggest single component, accounting for almost 66% of the goods producing sector’s employment. Overall, manufacturing is the 5th largest employment sector in the Bay Area. There is a slightly higher concentration of manufacturing employment in the Bay Area than the national average. Although many manufacturing companies do not physically produce products in the region, they do design and develop products locally. While employment in manufacturing is declining as a share of Bay Area employment, its share is falling faster in the rest of the country. Table 1 on the following page shows the major industry sectors and their employment concentrations in the Bay Area, Contra Costa County, and the Northern Waterfront. Manufacturing employment is heavily concentrated along the Northern Waterfront, 2.2 times greater than the national average. The Northern Waterfront also has a greater concentration of manufacturing employment than either the Bay Area or Contra Costa County. Location quotients (LQ) were used to measure the relative concentration of employment by industry within the Bay Area compared to its counterpart in the national economy. LQ coefficients greater than 1.0 denote a higher-concentration of employment for an industry within the region than the national average, which may indicate a possible competitive advantage. Location quotients greater than 1.25 may also indicate that the industry is producing more than can be consumed by the local economy and is serving a larger export market. These export oriented industries bring new dollars into the local economy, typically pay higher wages, and have high job multipliers which support employment growth in other sectors. Much of the Bay Area economy is focused on the technology sector. Biotech and medical instruments are one of the strongest growth sectors in the regional economy. While much of the pharmaceutical component of this sector involves research and development with more of the manufacturing occurring overseas, the precision instrument sector is a growth sector with highly-skilled